Alabama Contractor Licensing Guide

Working without a license in any state, on any type of construction project is typically a bad idea. Alabama, in particular, is very strict when it comes to unlicensed contract work. Contractors who perform work without a license face potentially serious penalties, and may lose their right to recover payment with a mechanics lien. In this guide, we'll explain the details you need to know about getting a contractor license in Alabama.

Who needs a contractor license in Alabama?

Alabama actually has two different licensing boards for contractors, depending on whether they perform residential or non-residential work. Contractors who work on both residential and commercial projects will generally need to hold at least two different licenses.

Residential contractors

Residential contractors in Alabama are licensed by the Home Builders Licensure Board (HBLB).

A Home Builders License allows contractors to perform "construction, remodeling, repair, improvement, or reimprovement" on a residential structure where the contract exceeds $10,000. Home builders can only work on buildings that are under 3 stories with fewer than 4 units.

The HBLB provides three different types of residential contractor licenses:

1. Unlimited license
2. Limited license
3. Roofers license

A limited license only permits contractors to work on "repair, improvement, or reimprovement" of a residential property. A roofers license limits contractors to "installation or repair of the external covering of a residence or structure." Contractors with an unlimited license can generally perform any type of work on a residential project (including roofing).

Non-residential contractors

The Alabama Licensing Board for General Contractors (LBGC) licenses all non-residential contractors -- those that work on any type of construction project aside from home building.

Alabama defines a "general contractor" as one who works on commercial or public contracts over $50,000, or on swimming pool construction worth over $5,000. This definition includes specialty or trade contractors who perform work on these types of projects.

The general contractor licensing board has six license classifications:

1. Building Construction
2. Building Construction Under Four Stories (BCU4)
3. Highways & Streets
4. Municipal & Utility
5. Heavy & Railroad Construction
6. Specialty Construction

Read the full breakdown of contractor classifications on the licensing board's website.

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How to get an Alabama contractor license

Step 1: Register the business

Anyone conducting business within the state of Alabama is required to be registered with the Alabama Secretary of State.

You will need to choose what type of business structure you wish to establish, depending on the amount of liability and tax consequences. The U.S. Small Business Administration has a helpful breakdown of the types of business structures (i.e. LLC, Corp., Partnership, etc.) to help you decide.

Step 2: Get insurance coverage

Every contractor is required to have general liability insurance coverage. If you plan to have employees, you'll also need worker's compensation insurance. Proof of both types of insurance should be submitted along with the application.

Step 3: Gather the required documents

In addition to the application, contractors will need to provide some additional financial documentation.

Financial records

Contractors will need to provide documentation to the respective board to demonstrate that they meet the financial requirements for licensing.

Proof of experience

Both licensing boards require proof of experience, though the specific documentation required varies by the type of license.

References (non-residential only)

The Licensing Board for General Contractors requires applicants to provide three references from a qualified source:

• Registered Architect
• Registered Professional Engineer
• Qualified person as declared by the Board

Specialty contractors can also provide references from licensed general contractors.

Step 4: Submit application & fee

After you've gathered all the required information, it's time to fill out and submit your application, along with the application fee.

Applications must be signed and notarized before filing. Any incomplete applications will automatically be rejected. As far as timing is concerned, contractor license applications need to be sent and filed at least 30 days before the quarterly Board meeting. Once the application is reviewed and accepted, you'll be allowed to sit for the exams.

Step 5: Take the exams

Once a complete application has been submitted and reviewed, the applicant will be able to register for the exams.

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License reciprocity

Each licensing board has their own reciprocal agreements with other states. Contractors seeking to perform work in Alabama who are licensed in one of the approved states may qualify for exemption from some of the examinations. However, all contractors need to complete the Business and Law Exam regardless of other exemptions.

The Qualifying Party for the Alabama license must be the same as the Qualifying Party for the out-of-state license.

Penalties for unlicensed work

The state of Alabama takes unlicensed contract work quite seriously. Under Ala. Code §34-8-4 (non-residential) and §34-14A-14 (residential), anyone who provides false information, impersonates another, or who works under an expired or revoked license will be found guilty of a Class A misdemeanor for each offense. Violations are punishable by up to a year in jail, and up to a $6,000 fine. Not only that, but you can also have your licensed suspended or revoked, and face administrative fines.

Furthermore, even owners, architects, or licensed contractors who contract with an unlicensed contractor can be guilty of a Class B misdemeanor as well. Although it may seem like an expensive hassle, getting your Alabama contractor license is well worth the effort.

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